Insurers push innovative ideas to grow uptake among millenials

Liaison Group Managing Director Tom Mulwa engages the Director Africa Reinsurance Corporation Ephraim Kiiza Bichetero on products and services offered at Liaison Group during the 48th Africa Insurance Organization Conference. [Wilberforce Okwiri, Standard]

Younger Kenyans want to live for now. They prefer and are used to getting immediate results for their actions.

The millennials and Generation Z are forcing insurance companies to rethink traditional policies in order to appeal to these booming new generations.

As at 2020, millennials (a person typically born between 1981 and 1996 as per the American definition) accounted for 50 per cent of the global workforce.

This is as Generation Z (born after 1996) – complete digital natives – are hot on their heels changing the modern workplace from interaction with authority to dress code.

Insurance experts reckon that while older generations want house and motor  vehicle insurance, the younger generations aim at insuring even gadgets such as phones and laptops.

Liaison Group Managing Director Tom Mulwa says insurance firms are at an inflection point and are scratching their heads on how to create attractive policies for millennials.

This, he says, stretches to products such as pensions and savings with millennials looking a ‘tangible’ policies that are short-term and value-based. 

“Their (millennials) issue is I live today, tomorrow will take care of itself. They don’t want to hear about five or ten years to come,” he said.

“The way to inspire protection for the millennials is to actually have daily covers. That they could have protection for today. They pay a premium in the morning and if something happens the insurance policy pays that day.”

He said that such daily covers would even be for life insurance or motor vehicles and need to be done digitally through phones to suit this tech-savvy generation.

Tangible benefit

Mr Mulwa added that another task for the insurance industry was the policy benefits they’d give to millennials as they want to value it with a tangible benefit.  

“The insurance business needs to focus on tangible benefits as a reward to insurance because the millennials don’t worry about a situation, for example, they believe their dependents will take care of themselves in case of death.”

Insurance policies can be attached to a tangible benefit such as a car, house, phone or something that a millennial aspires to. “We have to change how we think it has to be short-term, value-based, digital and mobile shouldn’t be tied to my employment benefits,” said Mulwa.

He added that there needed to be more aware of insurance value to the young population such as financial security and mobilising savings.

Mr Mulwa noted that the industry further needed to build more trust, and enhance insurance product distribution channels and innovation.

In the last few years, Kenyan insurance firms have been eyeing short-term products of less than a year to appeal to the booming young population.

However, daily insurance products might come with their own challenges.

For example, a millennial might argue that they drive their cars only on weekends and may not need a daily motor vehicle cover.

Another challenge may be the rise of a shared economy which is popular with the youth.

For insurers, it may be tough to determine the legal liability associated with the insured asset which is being used in the sharing economy.

Also, millennials want easy payment solutions for insurance products for instance paying in instalments. However, the law stipulates upfront payment of premiums for any cover creating a hurdle toward insurance affordability for this young population.

Kenya’s insurance penetration has remained low over the years and currently stands at 2.3 per cent. However, it is ranked top four in Africa with South Africa topping with a market penetration of 13.4 per cent. 

The total insurance penetration in Africa stood at only 2.78 per cent in 2019, far below the global average of 7.23 per cent, according to the African Insurance Organisation.

Africa Re regional director, Nairobi Ephraim Bichetero noted that one of the reasons that insurance penetration was low was because of a lack of insurance products that weren’t relevant to parts of the population.

“We have to make insurance relevant if you go to markets where the penetration rate is high they know its importance and have plans for education, savings and life among others,” he said.

Mr Bichetero also urged insurance firms to streamline their claims payments process to make it friendly and smooth. “Most people doubt whether they’ll be paid,” he said. “With the use of technology the sector can minimise fraud, and cost and make it available on the phone,” added Bichetero.

He noted that firms were appealing to younger generations by availing insurance products on phones through apps.

“The traction is however small, the industry still needs to find ways to make it relevant and of value. That’s the only way we can increase the penetration rate,” he said.

Global insurance

Mr Mulwa and Bichetero were speaking on the sidelines of the African Insurance Organisation Annual Conference which ended last week.

This annual pan-African meeting, marking AIO’s 50th anniversary, attracted over 1,000 delegates from local, continental and global insurance sectors including regulators, re-insures, brokers, insurers, and agents, among other stakeholders.

It was themed ‘Insurance and Climate Change; Harnessing the Opportunities for growth in Africa.’ The speakers presented insightful papers on the theme with highlights on data-driven solutions, agri-tech and insurance, Sustainable Insurance opportunities and challengers and increasing insurance penetration through consumer education.

“The conference was anchored on climate change, now we are in the era of Environmental, Social, and Governance (ESG), it was fitting that we look at how insurance fits in the climate change initiative, insurance as a risk management mechanism has a very big role to play in the climate change agenda,” explained Mulwa.